Lending

How to Engage Your Customers About the Fed Rate Cuts

5 mins read
November 18, 2024
By
Mike Waterston

The Fed rate cuts that hopeful homebuyers were waiting for are finally starting to materialize. Yet, mortgage rates haven’t immediately fallen. In fact, mortgage rates ticked up a bit in October after the first rate cut in September.

Homebuyers are anxiously wondering what’s going on—and what’s coming next. This presents a huge opportunity to earn their trust by providing education, guidance, and insights into what they can expect from the housing market in the coming months.  

Mortgage lenders and loan officers (LOs) need to engage potential homebuyers to help them understand the complex dynamics and nuances of our industry. They need to help them feel (at least a little) more comfortable with what to expect. Earning their trust today will help lock in their business when they do make a mortgage-related decision—whether it’s their first home purchase, an upsize or downsize, or a long-awaited refinance.

Borrowers and homeowners want an expert they can rely on to answer their questions and offer guidance on the complicated mortgage market. Loan officers need to be able to speak as this kind of expert authority on factors influencing mortgage rates, as well as the broader housing market.  

This blog will cover:

Explaining the “Fed rate”?

While this might be “Mortgage 101” to you, most people only have a general understanding that the “Fed rate” is important in shaping the interest rates that consumers see on mortgages and other loans. So, it can be helpful to provide your customers with a broader definition and discussion of what the “Fed rate” is, and how the Federal Reserve thinks about its decisions to raise or lower that rate.

The “Fed rate” is the federal funds rate—the interest rate at which banks lend money to each other overnight to meet reserve requirements set by the Federal Reserve (the U.S. central bank). The Fed rate is one of the Federal Reserve’s only tools for fulfilling its “dual mandate” of maintaining stable inflation and maximizing employment.  

By lowering the rate, the Fed can stimulate borrowing, spending, and hiring during economic slowdowns, boosting employment. Conversely, by raising the rate, the Fed can cool down excessive borrowing and spending, helping to control inflation when the economy is overheated.  

But this is a delicate and extraordinarily difficult balance to achieve. The Fed rate is an admittedly “blunt” tool for influencing economic stability. And Fed rate changes have an infamous “long and variable lag,” meaning the impacts take months to play out.

Why Fed rates don’t directly drive mortgage rates

The Fed’s decision to cut rates in September and November 2024 undoubtedly included hopes of easing the unprecedented tension in the housing market. But there are several reasons why mortgage rates aren’t following Fed rates on a linear basis:

The mortgage market already priced in initial Fed rate cuts

The Fed began signaling its intention to cut rates way back in December 2023. Experts debated the timing and size of those cuts through most of 2024, but the sense of inevitability only grew stronger—peaking in August as evidenced by some anticipating emergency rate cuts and others predicting a massive .75% cut.

Many mortgage lenders took calculated risks by lowering their rates in advance of a likely Fed rate cut. The goal was to capture constrained homebuying demand by being among the first to lower their rates. By the time the Fed rate cuts were announced on September 18, most lenders had already priced in that initial .5% drop.

In other words, the mortgage market does not always respond to the federal funds, but rather anticipates where that rate is headed in the near future. This naturally leads to the other two macroeconomic factors that have actually pushed mortgage rates higher since the Fed’s September rate cut.

Employment data indicates a strong economy

Jobs reports in the U.S. continue to exceed expectations, signaling broader economic strength. This strong job market persists in spite of geopolitical and macroeconomic headwinds and in defiance of both historic norms and expert-predicted slowing.

Mortgage lenders look at employment data as a sign of where demand will be in the coming months. A strong economy puts no pressure on lenders to lower mortgage rates. Moreover, employment data is also a reliable indicator of what the Fed will do with its rates in the coming months. If the job market remains hot, the Fed may hold off on additional rate cuts (and rate hikes may even re-enter the conversation).

Inflation has stagnated

We’ve come a long way from the surging inflation we saw 18 months ago. Inflation now sits relatively close to the Fed’s 2% target. But experts always warned the “final mile” would be the most challenging.  

The mortgage market looks at inflation as a signal of what the Fed will do next. Fed officials made it clear throughout 2024 that they’re anxious about easing up too early—and they’re firm on their 2% target. So, stubborn inflation may contribute to a decision to hold off on further rate cuts in the near future.

Demand remains low in the mortgage-backed securities market

Mortgage lenders view mortgages as financial products and one of the main ways they realize value on these products is through the sale of mortgage-backed securities (MBS).  

As a result, mortgage rates can be heavily influenced by investor demand for MBS: When MBS are in high demand, lenders can realize higher yields. So, they’re incentivized to lower mortgage rates to drive mortgage volume and capture those higher yields.

Right now, inflation and other factors (even lingering effects from the 2008 housing crisis) are keeping demand for MBS relatively low. So, the MBS is not putting any downward pressure on mortgage rates.

What to watch: 10-year Treasury yields signal mortgage rates

Admittedly, the four factors above are just part of what’s influencing mortgage rates. The complex interplay of various factors is hard for even experts to untangle and reliably predict.

The best advice you can give homebuyers wondering where mortgage rates are headed: Watch the Fed’s 10-year Treasury yields. This figure provides a reliable shortcut to anticipating mortgage rates, rather than trying to calculate the relative influence of various macroeconomic factors on their own.

That’s because mortgages are long-term investments. So, the mortgage market values long-term indicators over short-term signals. The federal funds rate is considered a short-term rate (for the aforementioned overnight borrowing between banks). But the 10-year Treasury yield is one of the most reliable long-term indicators. It incorporates investor sentiment about future economic strength, global economic trends, and inflation expectations.

Right now, 10-year Treasury yields remain high by historic standards. After peaking in late 2023, they hit a recent low in mid-2024 and climbed back up in recent weeks. We’ve seen mortgage rates take a very similar path over the last year.

How education now can build loyalty for later

Loan officers are likely frustrated that long-awaited rate cuts haven’t resulted in a massive surge in homebuying. And they’re certainly not excited to see mortgage rates ticking up recently. But these pains his potential homebuyers even harder.

The best strategy at the moment is to lean into an empathetic approach: Recognize that homebuyers are feeling even more frustrated and confused by the mortgage market. This presents a tremendous opportunity to meet homebuyers where they’re at—engaging them with helpful education on what’s happening in the mortgage market right now.

Providing this much-needed support and guidance around how and when the Fed rate will impact mortgage interest rates can build invaluable trust and sow the seeds for long-term loyalty. So, when the time is right, you’ll be their first call.  

How Will the Federal Reserve’s Interest Rate Cuts Impact Lenders?

Hear what Total Expert Founder & CEO Joe Welu and Chief Lending Officer Dan Catinella think lenders and loan officers can expect if rates continue to drop on the Expert Insights Podcast >

Resources

Related posts

Lending

Navigating the HPPA Shift: Why It’s a Win for Lenders Who Put Customers First

mins read
Read more

Change is the one constant in financial services, but the way we respond to it separates the leaders from the pack. The newly signed Homebuyer Privacy Protection Act (HPPA)—taking effect in March 2026—is a shift in how lenders can access and use consumer credit data. However, while some may view this as another regulatory headache, the reality is far more encouraging: it’s an opportunity to raise the bar on trust, transparency, and customer experience.  It’s another validation of our “Customer for Life” strategy.

This isn’t about dodging restrictions. It’s about recognizing that the playbook for winning customers is evolving—and those who embrace that evolution will come out stronger.

What’s changing?

Under the HPPA, credit bureaus can no longer sell a consumer’s credit file unless the lender meets one of a few narrow conditions:

  • Originated the consumer's current mortgage
  • Service the consumer's current mortgage
  • Obtained clear, documented consent from the consumer
  • As a bank or credit union, maintain an active account for that consumer

There’s even a GAO study on the way, examining how trigger-lead solicitations via text messaging impact consumers—a clear sign regulators are watching the fine line between engagement and harassment.

For lenders who have long relied on trigger leads, this represents a fundamental shift. But for institutions that have invested in building relationships the right way, this is good news.

What this means for lenders

The HPPA shuts the door on spray-and-pray solicitation tactics. But it opens the door wider for lenders who want to compete on trust and relationship strength. Specifically, it creates new opportunities to:

  • Deepen existing customer relationships with proactive, personalized engagement.
  • Capture consent earlier in the journey, before borrowers get lost in a flood of noise.
  • Differentiate in a less crowded, more consumer-friendly marketplace where trust is a true competitive advantage.

The lenders who lean in here will win—not because they shouted the loudest, but because they earned the right to stay connected.

Why this isn’t just another regulatory headache

Consumers have been saying it for years: the barrage of calls, texts, and emails after a mortgage application is exhausting. Some borrowers receive 100+ solicitations within 24 hours. That doesn’t build confidence—it erodes it. And we know this is not how our TE customers run their business.

HPPA represents a rare alignment of regulators, consumer advocates, and lenders themselves. It clears away predatory noise, improves the homebuying experience, and rewards lenders who put relationships at the center of their strategy.

As our Founder & CEO Joe Welu often reminds us, “Trust is the currency of modern financial services.” This law is an accelerant for lenders who understand that principle.

How we're going to help you thrive in a post-HPPA world

We’re not sitting on the sidelines waiting to see how this plays out. Our platform was purpose-built to help lenders engage customers in a way that’s personal, compliant, and built to last. Here’s how we’re making sure you’re ready for March 2026:

  • Proactive guidance: Our mortgage and tech experts are already helping lenders adjust monitoring practices, so they stay compliant without losing momentum.
  • Expand Customer Intelligence: We’re finalizing new capabilities to drive increased awareness and enrichment of your relationships, including expanding CI to all three bureaus, and streamlining our credit improvement alert.
  • Investments in consent: Upgraded features coming soon to capture and respect consumer consent in clear, frictionless ways—including through our ecosystem partnerships.

This isn’t a band-aid or a reaction; it’s an evolution of how modern lenders build sustainable engagement to develop customers for life.

Bottom line: this isn’t a roadblock—it’s an opportunity

Every regulatory change comes with friction. But HPPA isn’t just about compliance—it’s about clarity. It’s about stripping away noise and giving lenders who prioritize relationships a stage to shine.

The lenders who thrive in this new environment won’t be the ones chasing trigger leads. They’ll be the ones investing in trusted, personalized engagement—from first touch through every financial milestone.

And that’s exactly what Total Expert was built to help you do: navigate the shifts, build lifelong trust, and continue winning customers for life.

AI

Authenticity at Scale: Using AI to Deliver Genuine Customer Experiences

mins read
Read more

AI has surged from curious novelty to critical business driver faster than any other technology in the digital age. With AI capabilities evolving faster than most financial institutions (FIs) and marketing teams can train for, it’s easy to understand how leveraging AI tools and enterprise solutions effectively can become a frustrating experience for both leadership and marketing pros.

While every organization’s challenges are unique, one common thread is that most FIs lack a clearly defined strategy or framework for selecting, implementing, and using their AI solutions.

Here are three foundational elements to help marketing leaders accelerate AI-enabled customer engagement without losing control of authentic, on-brand customer experiences.

Focus on using AI to scale—not replace—your team

The AI revolution arrives with ironic timing for FIs: We’ve spent the last decade talking about how to bring back the human touch in a digital-first world. On the surface, it’s easy to think that AI will push us in the opposite direction—breeding more generic, cold, impersonal experiences.

But like other tech tools, the most immediate and significant value will come in using AI as a tool to scale your team’s capabilities. What does that look like in practice?

  • Automating or offloading the tedious and repetitive work your team does: Think about AI agents cold-calling for lead gen, doing time-consuming data analysis, or handling the orchestration of complicated, multi-touch, multi-channel, anything-but-linear customer journeys.
  • Unlocking deeper insights, faster: AI can dive into your customer data to find new kinds of intent signals in real time. Imagine identifying those key periods of transition or change in peoples’ lives—graduating, getting married, starting a family, changing careers, retiring—so your team can show up for customers at these critical moments.
  • Freeing up more time for human connections: At the simplest level, AI applied well will allow your team to do more with less—and that will give them more time to focus on where and how to provide that human touch and make those genuine one-to-one engagements. This is what we’ve been doing at Total Expert for more than a decade now through better analytics and smarter automation. AI just turbocharges everything.

Choose the right AI—and connect it to your core systems

Not even three years after ChatGPT opened this AI era, there are thousands of AI tools on the market—including hundreds of marketing-specific AI solutions. Don’t be fooled by the “they’re all the same under the hood” line—the packaging is critical to the usability and time-to-value with these tools, especially when it comes to delivering authentic experiences.

It’s really a classic Goldilocks problem: On one side of the spectrum, the big-name generalist AI platforms that claim to do everything produce generic experiences for your customers. They’re not built for the highly regulated, highly sensitive kinds of engagement and conversations that FIs have with their customers. Plus, it takes a lot of work—and time and money—to get them to work like you need them to.

On the other side of the spectrum are hyper-specialized AI apps built to do one very specific task right out of the box—but lacking the broader capabilities to connect with your core systems and orchestrate entire experiences. This kind of extremely focused functionality ends up creating maddening experiences for customers when they hit the limitations of the tools’ knowledge and capabilities. FIs need AI tools built with enterprise-grade, enterprise-wide capabilities—able to tie into your marketing system of record so they can see and orchestrate the full customer journey.

If you can solve that Goldilocks problem — finding an AI solution built for financial services and connecting it at the core of your CX — you can realize the full efficiencies and, more importantly, deliver a more genuine, helpful, brand-authentic experience.

Give your AI the inputs that set it up for success

Using GenAI to create content — copy, design, video, etc. — really can feel like magic. But the reality is that it’s inherently derivative. In other words, the outputs are only as good as the inputs — like the classic analytics adage: garbage in, garbage out.

If you want to maintain brand authenticity, create reliably compliant outputs, and deliver consistent experiences that feel seamless for your customers, you need to help the AI fully understands your brand, your engagement strategy, and your acute and big-picture objectives.

Best practices for prompt engineering is an article—or an entire book—in itself. But the point is, as incredible as AI is, it’s still a tool — and a tool requires a skilled, intentional user. Cultivating these skills also takes intention. Workers in any role can feel naturally hesitant to be open about their AI use and experimentation; they don’t want to risk looking lazy or replaceable. But to move forward effectively with AI, FIs need to build a culture that encourages that experimentation and sharing of new use cases and best practices.

AI as an engine for authenticity

There’s little doubt that AI will lead to a surge in impersonal, generic banking experiences. That’s not a condemnation of AI; it will be the result of FIs using generic AI tools and generic AI strategies.

That also means that genuine, personalized experiences will become even more differentiated in this incredibly competitive industry. The key is to focus on how to use AI to amplify what we’ve always strived to do in this industry: make real connections and build authentic relationships based on trust.

By focusing on these three principles — using AI to help your team focus on scaling human connections, choosing the right tool and integrating it deeply, and giving your AI the best possible inputs — you’re building a strategy that makes AI an engine for authenticity. The reward isn't just increased efficiency; it's the ability to deliver authentic, brand-consistent experiences at a scale never before possible.

AI

[Lykken on Lending podcast] Supercharging Mortgage Lending with AI

mins read
Read more

The mortgage industry is in the midst of a historic transformation—and artificial intelligence is leading the way. Our Founder & CEO, Joe Welu, joined David Lykken for an episode of the Lykken on Lending podcast to discuss how Total Expert’s AI solutions will reshape the customer journey for lenders.

From incubating leads and mining databases to nurturing post-close relationships, Joe shares how voice AI is giving loan officers “superpowers” that help scale productivity, improve retention, and focus on delivering the high-value advice consumers need most. With compliance guardrails built in and multiple AI agents on the horizon, this episode offers an inside look at the future of mortgage lending and why early adopters of AI will hold a major competitive edge.

Joe also explains why the human element remains central to homeownership, and how AI is designed not to replace loan officers, but to free them up for more meaningful conversations that strengthen customer trust and drive long-term loyalty.

Catch the conversation to hear how AI is revolutionizing lending and why Joe believes those who embrace it will be tomorrow’s market leaders.

Supercharging Mortgage Lending with AI

See Total Expert
in action

Sign up
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Create sustainable growth and increase loyalty with a customer engagement platform that’s purpose-built for financial institutions.
Schedule a demo